In a letter (attached) dated 3 November 2004 the First Presidency states responsibility for the progress of prospective elders is the high priests. Is this still the case ? - I can't find a letter to say that it has been discontinued. I am aware that Handbook 2, 7.6.1 states "Quorum and group leaders have the responsibility to help prospective elders prepare to receive the Melchizedek Priesthood.

Handbook 2 was published after that letter so it supersedes it. According to the section you quoted the bishop counsels with the EQ and HP to determine who can best meet their needs. However, as sbardshaw indicates there are some effects of the letter because when a default assignment is needed (like when a prospective elder moves in or is first ordained to the Aaronic priesthood) they are assigned to the HP group. But that assignment should be reviewed and possibly changed as needed.